tock markets in North America and Europe turned in a mixed performance. A 0.4% gain by the Dax was offset by a 0.3% decline in the Dow. Two main stories have dominated trading today, the UK officially kicking off Brexit negotiations by triggering Article 50 and a big rebound for crude oil on US inventory news.
Energy stocks were the top performing sector in many countries rallying over 1% and boosting the FTSE
and the S&P/TSX to 0.4% gains on the day. US DOE oil inventories rose less than expected while distillate and gasoline inventories fell more than expected indicating that the big builds of recent months may finally be subsiding. WTI rallied for a 2.0% gain on the day with Brent rising 1.7%, and gasoline gaining 1.9%.With copper also climbing, the resource weighted S&P/ASX along with resource currencies like AUD, NZD and CAD has been building upward momentum heading into today’s Asia Pacific trading day.
The other main area of market action today has been in Europe. Sterling has been particularly active between initial declines following the Scottish Parliament calling for another independence referendum and then rebounding into the Article 50 trigger announcement followed by choppiness afterward. PM May outlined her initial goals for negotiations and markets are now waiting for the EU’s initial response, due within 48 hours. Although both GBP and EUR fell against both USD and JPY today, Sterling rallied against the Euro in their crosses indicating that so far traders see Brexit as having more favourable prospects for the UK than the EU.
Tomorrow brings another US GDP update but it would take a really big surprise to make an impact, same with another slate of Fed speakers in a busy week for Fed speeches. We may hear more chatter out of Europe related to Brexit but the formal EU response isn't expected until Friday. There may also be more conversations in the US related to tax reform, the debt ceiling and whether Congress may take another kick at health care reform or not. Canada producer prices and German consumer prices may attract some attention particularly if they show inflation pressures easing as expected.
There have been no major corporate reports after the US close today.
Significant announcements released overnight include:
US pending home sales 5.5% vs street 2.5%
US DOE crude oil inventories 0.8 mmbbls vs street 2.0 mmbbls vs previous 4.9 mmbbls
US DOE gasoline inventories (3.7 mmbbls) vs street (2.0 mmbbls)
US DOE distillate inventories (2.4 mmbbls) vs street (1.2 mmbbls)
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
11:00 am AEDT Australia new home sales previous (2.2%)
7:00 am BST Norway retail sales street 0.1%
1:00 pm BST Germany consumer prices street 1.8% vs previous 2.2%
8:30 am EDT Canada industrial prices street 0 4%
8:30 am EDT Canada raw material prices street 0.9% vs previous 1.7%
8:30 am EDT US Q4 GDP update street 2.0%
8:30 am EDT US Q4 core PCE inflation street 1.2%
8:30 am EDT US jobless claims street 247K
10:30 am EDT US natural gas street (43 BCF)
9:45 am EDT FOMC Mester speaking
11:00 am EDT FOMC Kaplan speaking
4:30 pm EDT FOMC Dudley speaking
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